The illegal imports of cheap foreign silk thread, among slew of diverse elements, has taken its tool on the sole silk thread factory in Iran which has been forced to close down operations, IRNA reported from Rasht, Gilan province.

As the result of the recession gripping the sector, 200 workers have been laid off said the Managing Director of the state affiliated 'Souma Sara' silk thread factory Mehrdad Haji-Khani here Saturday.

"The factory has lost rls 30.6 billion in the past three years and there was no choice, but to shut its operation." "As far we our concerned there is no alternative, but to close down because the factory is effectively bankrupt and those workers who have not been paid so far will be paid severance equal to three months of their annual salaries," he said.

He blamed cheap imports of silk from China and Central Asian countries as the reason for the dire situation.

Although the daily losses are running at rls 20,000,000 million daily "the plant should not become obsolete and there are plans to be ceded to the private sector."

"After the transfer of ownership, hopefully it will resume operations in another form."

The factory's' final price are above the market price which has been flooded by cheap illegal imports, recession on international silk market for the past two years, and the domestic carpet sector, he underlined.

Some provincial official has also maintained that given that silk prices seem to be on a rebound, the factory should not be shut down.

Minister of Economy and Finance Tahmasb Mazaheri said here last month that privatization of economy in the midst of outlining the fourth five-year socio-economic development plan (2005-2010) remains the pillar of economic development for the future.

Speaking on the occasion of inauguration of a 'privatization think thank' he said for many years state has dominated the economy in Iran, 'but the outcomes of such policies have been largely futile in economic growth'.

The state-ownership of industry, banks, and insurance companies and other government affiliated organs were necessary in the past years, 'but now here are no reason for state domination of the economy'.

He referred to the peaks and troughs in the privatization drive in the country, adding privatization as a strategy could not have been thoroughly implemented in the past decade.

"Now all organs including the Majlis see privatization as the cure of the economy's ills."

"Privatization has its own returns in different countries based their economic structures."

He also said that a Privatization Support Fund has been set up. The fund aims to promote workers employment and training and directives to that effect will soon be provided to the cabinet.